Claiming Vat On A Hire Purchase Agreement

HMRC has just published Revenue – Customs Brief 8: Change to the partial VAT exemption. This applies to companies that provide goods through lease-to-sale contracts. The point of the property tax for delivery to the customer is, in most cases, the date of delivery or withdrawal of the goods. If there are two deliveries (for example. B to and by a financial company), this is the tax basis for the delivery of the customer by the financial company. The point of the property tax for delivery to the financial company is usually made on the date the goods are made available to the financial company. Unless the agreement is otherwise stated, it may be the effective date of the financial agreement, possibly on the date it was signed by the last party. In the wake of the COVID 19 crisis, the global automotive industry is facing an unprecedented challenge. Trying to manage reduced household budgets, many people struggle with their monthly car payments as part of their hp or PCPs agreements. The exact effect depends on the circumstances.

For example, a customer can order a commodity while making a down payment. This will create a tax point equal to the amount paid, expected on that date between the two parties. A financing agreement is then entered into through a third-party financing company. As a result, the initial down payment is converted into a customer`s payment to the financial company, which is in turn credited by the financial company as payment for the delivery of the goods by the original supplier to the financial company. This removes the initial checkpoint. Here too, you can only deduct the interest on the company`s profits if the lease-purchase agreement on which interest is charged applies to a commercial purpose. You cannot charge your personal car z.B via corporate accounts. Delivery of a car under a lease agreement (HP) or a personal contract plan (PCP) is a delivery of goods for VAT purposes. Once the customer commits, there is a delivery from the car dealership to a financial institution (usually a credit institution or financial company within the manufacturer`s group of companies) and a subsequent delivery from the financial house to the customer. Both stocks are being done simultaneously. For both forms of financing, VAT on the full value of the car is paid in advance by the financial house to income when the customer takes possession of the car. The tax point for separate delivery is the date of payment of interest.

If the payments contain an item attributable to the credit, it means that a tax point occurs at each payment receipt.